Vietnam Tariff Issue Debated
By Emerson Schwartzkopf
WASHINGTON – A committee advising the office of the United States Trade Representative (USTR) could make a recommendation on possible 301 tariffs on all goods imported from Vietnam — including hard surfaces..
After a virtual public hearing last week, a special 301 Committee will consider whether the USTR should place tariffs in response to alleged currency manipulation.
The USTR announced last October that it would investigate charges of Vietnam’s government undervaluing its state currency – the dong – to give the country’s exports an unfair trade advantage in the U.S. market.
The 301 committee set a deadline of Jan. 7 to receive further comments from the Dec. 29 virtual hearing, and could make a recommendation on the issue after that. Currently, there is no set schedule on a tariff decision or its possible level.
At issue is whether the State Bank of Vietnam used its management of the dong/U.S dollar exchange rate and actions in the foreign-exchange market to keep the dong’s value low. The result would lower the market value of Vietnamese goods in foreign markets.
The virtual hearing included testimony from 16 representatives of manufacturers, trade groups and workers. Three of the panelists — an Ohio magnet manufacturer, a wood-furniture producer in West Virginia, and the legislative director of the United Steelworkers union — supported the idea of a tariff. All the other panelists disagreed.
In announcing the investigation in October, the USTR cited “available analysis” that Vietnam undervalued the dong against the U.S. dollar by approximately 7% in 2017 and 8% in 2018, along with an unspecified amount in 2019.
The USTR also noted evidence that the State Bank of Vietnam purchased a net $22 billion in foreign exchange last year, causing the nominal exchange rate of 23.224 dong/US$1 to be undervalued by approximately 1.09 dong-per-dollar.
The U.S. Treasury Department also cited Vietnam last month as one of two countries working as a currency manipulator. (Switzerland is the other.) The Treasury report also specifically named Vietnam as manipulating exchange rates “for gaining unfair competitive advantage in international trade as well.”
Prior to the public hearing last week, Cambria Company LLC, the largest U.S.-based manufacturer of quartz surfaces, submitted comments to the USTR on the issue. The Eden Prairie, Minn.-based company noted financial actions taken by the Vietnamese government, along with corresponding changes in shipments in quartz-surfaces from Vietnam to the United States, as an unfair-trade tactic in the U.S. market.
USTR actions on a possible tariff following this month’s public hearing is unclear. Unlike actions by the United States International Trade Commission (USITC), which set previous tariffs on quartz surfaces and porcelain tile, the USTR doesn’t follow a tightly set schedule in determining any action.
Previous USTR actions during the Trump administration include the blanket U.S. tariffs on all Chinese goods of 25%, sparking the trade war between the two countries, and the open-ended “Airbus” tariff schedule on goods from the European Union.
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